Dividend stocks use a portion of the earnings percentage management has decided not to reinvest in the business. Holding shares gets you a scheduled payment once every quarter or every year. The firm’s board of directors decides on the payout and whether or not to increase (or decrease) the amount in the future. Next, they determine the ex-dividend date (the last day shares can be purchased at a discount) and the record date when shareholders must possess the shares needed to begin receiving payments.
Many investors choose dividend stocks to receive payments from their holdings, and it’s easy to enjoy the peace of mind that passive income provides. So long as the stock performs well and its EPS grows, it leaves spending room for stocks to increase their dividends. This, of course, helps to keep investors on board. Dividends can be wonderful but should not be the only criterion for selecting a stock in which to invest. Stocks that pay dividends are best when they represent stable, developing businesses with safe metrics. This ensures that the dividend can be paid for the foreseeable future and will likely be raised regularly. Today’s list doesn’t quite comprise value stocks, so be prepared to spend an extra dollar or two; remember that it will return with patience. I’ve picked a few that are appropriate for today’s market.
That said, I’ve landed on three names whose earnings reports, sales growth, price forecasts, and reputation among investors are all solid— and let’s not leave out the handsome dividends. Analysts agree that these profitable tickers can only bolster the strength of our portfolios:
Home Depot Inc (HD)
Home Depot, Inc (HD) is in the business of selling tools, hardware, and construction supplies. HD’s offerings cover many needs, including construction, home remodeling, landscaping, and decorative items. HD’s operations expand to Canada and Mexico in addition to the U.S. HD rents tools and equipment for DIY projects and offers its own brand of installation services. HD‘s headquarters are in Atlanta, GA, and it was founded on June 29th, 1978, by Bernard Marcus, Arthur M. Blank, and Pat Farrah.
HD’s stock is currently down close to 8% year-to-date, and its prices have been lingering near the bottom of its 52-week range. Charts show a “buy-the-dip” opportunity; we could even consider HD undervalued. HD had a near-perfect earnings record in its fiscal 2022, the exception being a slight miss on revenue for the most recent quarter. As of the last 12 months, HD boasts an incredibly high ROE (Return on Equity) of 1,465% on top of roughly $157 billion in revenue. HD holds a market cap of almost $300 billion, a P/E ratio of 17.56, and a forward P/E of 18.38. The current quarter shows HD with sales of $38.7 billion, at an EPS of $3.88 per share. HD has a dividend yield of 2.85%, with a quarterly payout of $2.09 ($8.36/yr) per share. Analysts who offer yearly price forecasts have given HD a median price target of $340, with a high of $400 and a low of $248. The median estimate would send the stock up by nearly 17% while hitting the high mark would take it 37.6% higher. Analysts think now’s the time to buy and hold stock in HD.
American Tower Corp (AMT)
American Tower Corp (AMT) owns, operates, and develops multi-tenant real estate assets, and the company also offers real estate investment services— also, wireless service providers and TV and radio broadcasters lease space at AMT’s communications sites. AMT’s business is divided into the following geographical divisions: North America, Latin America, Europe, and Asia-Pacifc. AMT was founded in 1995 by Steven B. Dodge, headquartered in Boston, MA. It placed 375th on the Fortune 500 in 2022.
AMT’s numbers indicate a smaller overall business than that HD’s size but also reveal a stock performing quite well despite setbacks in the broader marketplace. For the current fiscal quarter, AMT shows sales of $2.7 billion and an EPS of $1.13 per share. AMT offers a very decent trailing 12-month profit margin of 69.5% upon revenue of $10.7 billion in the same period. Regarding earnings, it reports again on May 4th, but as of its last fiscal year, it beat analysts’ EPS projections for all four quarters, only missing slightly on revenue once. AMT shows healthy year-over-year growth in critical areas such as EPS and net income and is forecasted to continue its growth trajectory throughout fiscal 2023. AMT presently has a dividend yield of 3.16%, with a quarterly payout of $1.56 ($6.24/yr) per share. Analysts who provide annual pricing projections have assigned AMT an average price target of $244, with a high of $271 and a low of $224. AMT is currently experiencing a dip, and its median and high-end price targets would propel it forward by 25.2% and 39.1%, respectively. Even the lowest end of its price range gives the stock a 15% gain, and analysts agree that now is an advantageous time to buy and hold AMT.
McDonald’s Corp (MCD)
By now, we know the fast-food icon McDonald’s Corp (MCD)— surely most of us since we were kids. Aside from its well-established U.S. division, MCD’s International Markets segment includes Canadian, French, German, Australian, Italian, Spanish, Russian, and U.K. locations. MCD’s International Markets & Corporate division deals with affiliate and emerging licensee markets. MCD serves burgers, wraps, salads, chicken nuggets, oatmeal, soft-serve cones, shakes, coffee drinks, and more. On April 15th, 1955, MCD was founded by Raymond Albert Kroc in Oak Brook, Illinois, where it remains headquartered.
MCD’s food quality may vary depending on who you ask, but its business metrics are in more objective territory where there isn’t room for much debate. MCD has an ROE of 521.40% on top of more than $21 billion in revenue over the last 12 months. For the current fiscal quarter, MCD shows sales of $5.5 billion with an EPS of $2.30 per share. MCD handily reported earnings that beat analysts’ forecasts for all four quarters of fiscal 2022, most recently by 5.25% (EPS) and 3.15% (Revenue). MCD’s dividend yield is 2.27%, paying shareholders a quarterly amount of $1.52 ($6.08/yr) per share. Analysts who offer 12-month price estimates mark MCD with a median price target of $295, with a high of $328 and a low of $262. While MCD is only down a little year-to-date, it’s still well-positioned for prospective investors. The price range represents a potential 25% increase from MCD’s current pricing, and analysts agree that investors seeking gains would be wise to invest. MCD has a buy rating that, like its peers, should captivate our attention and encourage our consideration.
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